Description

A relative return multi-sector strategy that integrates sovereign hard currency debt, local currency rates, local currencies, and emerging market corporate debt within an actively managed, strategic asset allocation framework. Using this approach we capture the full opportunity set in emerging market fixed income while managing these four alpha sources in an integrated manner with the goal of achieving the highest risk-adjusted returns available within the asset class.

Management Team

The EMD Relative Return team, co-headed by James Barrineau and Rajeev De Mello, consists of deep and highly experienced management teams in multiple time zones, drawing on the expertise of more than 30 credit analysts across five continents, with in-market presence in six major emerging countries.

James Barrineau

James Barrineau joined Schroders in April 2012 as Co-Head of EMD Relative Return. Prior to joining Schroders, Jim worked as a Senior Portfolio Manager - Sovereign from 2010 to 2012 at ICE Canyon, an alternative investment firm specializing in emerging market debt.

James Barrineau

James Barrineau joined Schroders in April 2012 as Co-Head of EMD Relative Return. Prior to joining Schroders, Jim worked as a Senior Portfolio Manager - Sovereign from 2010 to 2012 at ICE Canyon, an alternative investment firm specializing in emerging market debt.

Fernando Grisales

Fernando Grisales joined Schroders in April 2012 as a Portfolio Manager in the EMD Relative Return team. He had previously worked at ICE Canyon as a Senior Portfolio Manager for two years. From 2001-2010, he worked at AllianceBernstein in a variety of roles.

Fernando Grisales

Fernando Grisales joined Schroders in April 2012 as a Portfolio Manager in the EMD Relative Return team. He had previously worked at ICE Canyon as a Senior Portfolio Manager for two years. From 2001-2010, he worked at AllianceBernstein in a variety of roles.

Investment Philosophy

We believe that value exists across the EMD opportunity set in every market cycle and episode of structural change and can be identified through fundamental research and time-tested investment tools. We advocate an integrated, dynamic asset allocation approach utilizing the entire EMD opportunity set as the best way to balance risk and return and optimize exposure to this asset class. Our relative value approach seeks to best harness the four main sources of potential excess return in EMD: hard currency sovereign, hard currency corporate, and local rates and currencies – in a dynamic, integrated format that minimizes unintended risks.

Investment Process

We begin by setting broad themes and an overall thesis for emerging markets for the next three to six months. We pay close attention to the overall liquidity environment in EMD as that has been a major driver of historical returns. We also continually monitor sovereign and corporate sector valuations to understand what value may be present at any given time. We further analyze local yield and historical F/X valuations, again, in order to gain a sense of where value may reside in the market.

We distill this information into a consensus recommendation about the weighting of various sectors within EMD. We divide the EMD universe into Strategic Risk Sectors (“SRS”), which are meant to serve as longer-term anchors to the portfolio. Our regular analysis of the EMD opportunity set leads us to identify market themes within these SRS that are particularly compelling. We then move on to our analysis which develops the USD sovereign, F/X and local duration ratings. We begin with an assessment of the sovereign issues of the underlying benchmark countries using a proprietary valuation model. Our Sovereign Credit Model utilizes 10 factors which are specifically based upon external, growth and public debt dynamics and not market data. Sovereign Credit Model output is also stress tested at the country level to help determine our intrinsic country credit ratings.

Once all of that information is aggregated and analyzed, we develop our own Intrinsic Rating for each country, which is its fundamental rating after the credit trajectory, market technicals and potential catalysts are factored in. Local duration and F/X ratings are separately developed using much of the same input, but reflecting the fact that these assets do have different valuation drivers. We use qualitative factors (such as the steepness of the yield curve and changes in CPI) and market drivers (such as the policy framework and current local bond valuations). Our rating range for F/X and Local Duration is Overweight, Market Weight and Underweight.

Key Features

The strategy uses an integrated approach to the main sectors of EM fixed income, insuring that portfolio risks are assessed in the most comprehensive manner

The strategy is less benchmark-constrained than typical hard currency sovereign-based strategies, which provides the flexibility to pursue the most attractive investment opportunities available

Literature

Investment Options*

Please consider a mutual fund's investment objectives, risks, charges and expenses carefully before investing. For access to the prospectus, please click the following link: prospectuses. To obtain any further information on any Schroders fund, please read the prospectus, call your financial advisor or call Schroder Mutual Funds at (800) 464-3108 for Individual Investors or (800) 730-2932 for Intermediaries/Financial Consultants. Read the prospectus carefully before investing.

*The strategies listed include those which may be subject to the ability to meet investment minimums and other specific criteria, and may not be directly available to U.S. retail investors.

**EMBI Global Diversified dollar bond, EM Global Diversified local currency and CEMBI Broad Diversified corporate indices are unmanaged portfolios of local and global emerging market debt securities used as a point of comparison for the strategy. No strategy can guarantee that its performance will match the performance of its benchmark.

There can be no guarantee these strategies will be successful or that the investment objective can be achieved.

Investment risks: All investments involve risks including the risk of possible loss of principal. The strategy will be affected by the investment decisions, techniques, and risk analyses of the investment team, and there is no guarantee that the strategy will achieve its investment objective. The values of the investments held by the portfolio may fluctuate in response to actual or perceived issuer, political, market, and economic factors influencing the financial markets generally, or relevant industries or sectors within them. Fluctuations may be more pronounced if the strategy invests substantially in one country or group of countries or in companies with smaller market capitalization. The market value of the portfolio may decline as a result of a number of other factors, including interest rate risk, credit risk, inflation/deflation risk, mortgage and asset-backed securities risk, US Government securities risk, foreign investment risk, currency risk, derivatives risk, leverage risk and liquidity risk. Frequent trading of the portfolio may result in relatively high transaction costs and may result in taxable capital gains. Investing overseas involves special risks including among others, risks related to political or economic instability, foreign currency (such as exchange, valuation and fluctuation) risk, market entry or exit restrictions, illiquidity and taxation. Emerging markets pose greater risks than investment in developed markets.

Please consider a fund's investment objectives, risks, charges and expenses carefully before investing. To obtain this and other information on any Schroders Fund, please click the following link:prospectuses. Read the prospectus carefully before investing. To obtain any further information call your financial advisor or call Schroder Mutual Funds at (800) 464-3108.

Schroder Investment Management North America Inc. ("SIMNA Inc.") is an investment advisor registered with the U.S. SEC. It provides asset management products and services to clients in the U.S. and Canada including Schroder Capital Funds (Delaware), Schroder Series Trust and Schroder Global Series Trust, investment companies registered with the SEC (the "Schroder Funds").

Shares of the Schroder Funds are distributed by Schroder Fund Advisors LLC, a member of FINRA. SIMNA Inc. and Schroder Fund Advisors LLC are indirect, wholly-owned subsidiaries of Schroders plc, a UK public company with shares listed on the London Stock Exchange. Schroder Investment Management Ltd. is the UK based investment subsidiary of Schroders plc.